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1 By: Hank Mittelhauser, PH.D. 3 Brief overview of the growth of - PDF document

Jan 21, 2024 •311 likes •582 views

August 2 gust 28, 2 2013 13 Surdy Surdyk & & Baker Baker 1 Intro and Speaker ID (Hopp) Environmental Concerns and Requirements of HFRA (Mittelhauser) Permit and Hearing Procedures Established by HFRA (Kurfirst)

  1. August 2 gust 28, 2 2013 13 Surdy Surdyk & & Baker Baker 1  Intro and Speaker ID (Hopp)  Environmental Concerns and Requirements of HFRA (Mittelhauser)  Permit and Hearing Procedures Established by HFRA (Kurfirst)  Insurance Trends and Coverage Issues in General (DiUbaldo)  Insurance Requirements Mandated by HFRA and Products Presently Available (Jung)  Q & A Session (Hopp and Speakers) 2 1

  2. By: Hank Mittelhauser, PH.D. 3  Brief overview of the growth of hydraulic fracturing and the fracturing process.  Environmental concerns and requirements of the HFRA. 4 2

  3. Source: http://cnx.org/content/m41725/latest/graphics7.png 5 6 3

  4. Source: Energy Information Administration based on data from various published studies. Updated: May 9, 2011 7 8 4

  5. How Hydraulic Fracturing Works 9 Site Layout During Fracking 10 5

  6. What’s Left After 3 Months – 1 Year 11 ENVIRONMENTAL CONCERNS AND REGULATORY REQUIREMENTS 12 6

  7. Public Perception - Mixed Support Public Opposition Addressed in HFRA  Permitting - Section I-30 through Section I-65  Chemical disclosure – Section I-77  Protection of water supply wells – Section I-25(a)(3) 13 Misleading Pictures about Fracturing Source: http://www.wired.com/magazine/wp-content/images/18- Source: http://media.salon.com/2012/04/fracking_rectangle.jpg 06/pl_screengrab_gasland_f.jpg Methane Water Quality Addressed in HFRA Fueling tank releases – Section I-70(e)(1)  Casing integrity – Section I-70(d) and Sections (1-18)  Failure during operations – Section I-75(a)  Produced water storage – Section I-75(c)  Water testing – Sections I-80, 1-83, I-5  14 7

  8. Other Issues Expressed by Opponents Source: http://www.csmonitor.com/var/ezflow_site/storage/images/media/images/1108-earthquake- Source: http://www.nyelectedofficials.org/wp-content/uploads/2012/05/Fracking- oklahoma-fracking/10958802-1-eng- US/1108-earthquake-oklahoma-fracking_full_600.jpg Site1.png Earthquake Damage Air Quality (Invalid for Fracturing process) (Potential Issue) Addressed in HFRA Seismic impacts – Section I-96 • Air emissions – Section I-75 (e) • 15 Other Issues Expressed by Opponents Source: http://static.guim.co.uk/sys-images/Environment/Pix/columnists/2011/11/2/1320259785691/Fracking-for-shale- http://switchboard.nrdc.org/blogs/rhammer/fracking-1.jpg Traffic gas-in-006.jpg Diminished Property Values (Valid) (Potential Issue) Addressed in HFRA Site restoration – Section I- Section I-30(15) • • 95(b) 16 8

  9. Conclusions  This is good legislation with widespread support from industry, unions, and prominent environmental organizations.  The legislation is particularly strong in the requirements to follow API Guidelines, permitting, and pre-fracturing baseline testing.  The IDNR needs to develop more specific regulations in many areas including minimizing traffic impacts, development of seismic guidelines with the Illinois Geological Society, and specifications of analytical methods, detection limits and sampling protocols. 17 By Leonard S. Kurfirst Surdyk & Baker 18 9

  10.  Every permit applicant shall first register with the IDNR at least 30 days before applying for a permit.  Registrants must disclosure all “serious violations” within the previous 5 years.  Proof of “at least” $5,000,000 in insurance coverage must be provided. 19  Application fee is $13,500 with most going to IDNR for funding of personnel and resources necessary to administer HFRA.  A severance tax between 3% and 6% of the value of the oil and gas produced will be applied.  A tax reduction of .25% will be given when a minimum of 50% of the total workforce hours at a site are performed by Illinois construction workers. 20 10

  11.  Conventional oil and gas production is exempt.  Required Permit Information ◦ Location and depth of well to be drilled (plat) ◦ The source and quantity of water to be used ◦ The identity, concentrations and volume of chemicals found within the fracking fluid ◦ Limited trade secret protection  An operator must obtain a separate permit for each well at a well site or pad.  Each permit shall have a $50,000 bond or a blanket bond of $500,000 for all permits. 21  Handling and storage of flowback  Well site safety procedures  Containment  Well casings and cementing  Traffic management 22 11

  12.  HFRA expressly states that if a proposed fracking site is located within the limits of any city, village or incorporated town, the operator must obtain consent before a permit can be issued.  It is not necessary to obtain consent from a county board. Its only recourse is to object at the time of the public hearing. 23  Within 3 days of permit application filing, notice must be provided to all owners of real property within 1500 feet of well site and to county.  Public comment period begins 7 days after IDNR receives permit application and lasts for 30 days if no hearing and up to 45 days with a hearing.  Anyone may file a comment and the IDNR may request applicant to respond.  Hearing can only be requested by a person, government agency or county which might be “adversely affected.” No frivolous complaints. 24 12

  13.  All parties who might be adversely affected can offer evidence.  Contested case provisions of the Illinois Administrative Procedures Act apply. There will be a hearing officer and a transcript.  Expert testimony is permitted, as is “reasonable cross examination of witnesses.  IDNR’s approval or denial of permit considered to be a “final administrative decision subject to judicial review.” 25  Baseline water testing must be performed as part of the permitting process and afterwards at 6, 18 and 30 months.  Three baseline water samples for each source within 1500 of well site.  Baseline sampling includes wells, surface and groundwater sources.  7 Days to Report Evidence of Pollution 26 13

  14.  Presumed Liability for Polluted Water If: ◦ GW clean prior to fracturing. ◦ “Pollution” or “diminution” was discovered during fracturing or up to 30 months later. ◦ GW contamination is within 1500 feet of a well site. ◦ You conducted “fracturing operations” at the site.  Standard for Rebuttal ◦ Clear and convincing evidence  Investigations ◦ May be requested by anyone who believes a water source has been contaminated . Costs may be imposed on permittee . . ◦  Remedies ◦ Provide alternative water source ◦ Water source remediation 27  Civil Sanctions ◦ Any violation of HFRA is subject to a fine not to exceed $50,000 for the violation and an additional $10,000 for each day it continues. ◦ Any failure to obtain a permit or observe a mandated setback is subject to a fine not to exceed $100,000 for the violation and an additional $20,000 for each day it continues.  Actions may be initiated by IDNR, Attorney General, State’s Attorney, Citizen Suits.  Criminal Sanctions Can Also Apply. 28 14

  15.  Most data will be online at IDNR website being built.  IDNR registration forms within 90 days of HFRA enactment.  Permit application form expected from IDNR around January 2014.  Joint Committee on Administrative Rules (JCAR) – Final Rules unlikely before April.  IDNR permit decisions within 60 days of filing. First set June of 2014? 29  2 years after first permit issued, and every 3 years thereafter, IDNR must prepare a report re: impact of fracking on the State.  The IDNR will also chair a task force with representation from industry, government and environmentalists.  Task force must recommend by September of 2016 whether more regulations are needed. 30 15

  16. By Robert W. DiUbaldo Edwards Wildman 31  Leasehold Owners, Energy Companies, Landowner  Operator and Drilling Sub-Contractors  Company Performing Hydraulic Fracturing  Well loggers  Construction Contractors  Electricians  Geophysical Consultants  Rigs and equipment rental/leasing companies  Waste Management Companies  Pipeline contractors  Truckers (water delivery and waste hauling)  Chemical suppliers for fracking fluids 32 16

  17.  Property/Environmental damage  Bodily injury/Medical monitoring  Nuisance and trespass claims  Diminution in nearby property value  Putative class actions  Alleged regulatory or administrative violations  Securities class actions  Citizen Actions  “Disclosure” litigation 33  CGL  Commercial property  Environmental/pollution  Operators’ extra expense (control of well)  Workers’ compensation  Homeowners  Commercial trucking/auto/cargo  E&O  D&O 34 17

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